Anonymous
Post 05/03/2018 09:06     Subject: leasing vs buying
Anonymous wrote:Someone explain to me why buying is better than leasing a car -- here are some numbers:
I have owned a minivan for the last three years. Bought it used for $26k plus $2k in taxes
It is now worth about $10k (dealer estimate aligns more or less with KBB)
That means it cost me $18k to have that car for three years, plus the cost of new tires, brake pads, and other maintenance. So, cost of well over $6k per year to drive a used minivan.
Now I'm looking for a different car -- a three-row SUV (because even though I have lots of kids I'm a little cooler now than I was three years ago). A new Honda Pilot costs ~$38k. A new Ford Explorer costs ~$32k. BUT, I can lease a Ford Explorer for about $270/month plus taxes. and $3500 down That means my 3-year cost to own would be somewhere around $15500 ($300/month plus $3500), less than the $18+ I just spent on three years of a beater minivan. Everyone always says buying is better than leasing, but I'm not seeing it this time. Thoughts? I obviously would have the $10k from my minivan trade-in and probably another $5k to put on the down payment on something new, and then would finance the rest. I have excellent credit.


If you only needed a vehicle for exactly three years, maybe a lease would be better. Comparing buying to leasing is about the life cycle of a car. ie is it cheaper to buy a car and own it for 10-12 years or is it cheaper to lease for 10-12 years. Strictly based on what is cheaper, buying is absolutely better.

I'm also confused about how a USED vehicle could depreciate 16k in 3 years! My Toyota RAV4 is 11 years old and I bought it new. It has depreciated 16k in 11 years. During this 11 years I've paid maintenance type repairs and about $600 in "broken" stuff. I've been car payment free for 8 years, and I still have an asset still worth roughly 8k. Had I leased all this time I would have paid a TON more over the past 11 years.
Anonymous
Post 05/03/2018 08:57     Subject: leasing vs buying
L:easing a car is not always a bad deal. Depending upon the car that you want, your driving habits, and your replacement cycle, it can make sense for some people. In particular, it makes sense for a business (since it makes the expense paperwork easier). It would also work for someone who replaces his car every three years, always buys new, is unlikely to go over the mileage limits, and treats the car carefully. The other time when leasing can make sense is for someone whose needs will change in three years and who will need a different type of vehicle at that time.

The problem is that most people are not the very specific type of customer for whom leasing would make sense. And the ideal lease customer always buys a new car and replaces it often, so he is not necessarily trying to optimize value-per-dollar in making that decision. This is why most car-buying and financial advice books say that leasing is a bad deal.

Personally, I think that leasing is great. I don't lease, but I do buy off-lease used cars that have already had significant depreciation and are typically in excellent condition. I then drive them for years.
Anonymous
Post 05/03/2018 01:14     Subject: Re:leasing vs buying
Don't buy new.
Anonymous
Post 05/02/2018 14:44     Subject: leasing vs buying
If you are going to get a new car every 3 years and drive 12k miles a year of short trip stop and go traffic, then leasing almost always comes out ahead over buying. In all other circumstances (e.g., if you are happy buying a used car, owning the car for longer, drive lots of miles, are going to be kind to you car) then owning comes out ahead
Anonymous
Post 05/02/2018 14:26     Subject: leasing vs buying
I think if you buy a car and keep it forever (maybe not 10 years, but more like 12-15 years) then buying will come out ahead, but at shorter time frames it will depend a lot on your specific circumstances (what car you get, what kind of deals you get on purchase or lease, etc.)
Anonymous
Post 05/02/2018 13:19     Subject: leasing vs buying
Anonymous wrote:Someone explain to me why buying is better than leasing a car -- here are some numbers:
I have owned a minivan for the last three years. Bought it used for $26k plus $2k in taxes
It is now worth about $10k (dealer estimate aligns more or less with KBB)
That means it cost me $18k to have that car for three years, plus the cost of new tires, brake pads, and other maintenance. So, cost of well over $6k per year to drive a used minivan.
Now I'm looking for a different car -- a three-row SUV (because even though I have lots of kids I'm a little cooler now than I was three years ago). A new Honda Pilot costs ~$38k. A new Ford Explorer costs ~$32k. BUT, I can lease a Ford Explorer for about $270/month plus taxes. and $3500 down That means my 3-year cost to own would be somewhere around $15500 ($300/month plus $3500), less than the $18+ I just spent on three years of a beater minivan. Everyone always says buying is better than leasing, but I'm not seeing it this time. Thoughts? I obviously would have the $10k from my minivan trade-in and probably another $5k to put on the down payment on something new, and then would finance the rest. I have excellent credit.


Buying a car seems like a bad idea in your case because you:

1) Bought the car at an inflated price due to buying it retail from a dealer rather than buying it private party. The car they sold to you for $26,000, they bought for $20,000 I bet.
2) Are selling the car at a decreased price due to selling it to the dealer again. The dealer is going to take the car they bought from you for $10,000 and sell it again to the next person for $13,000
Anonymous
Post 05/02/2018 12:51     Subject: leasing vs buying
Anonymous wrote:
Anonymous wrote:

To a different PP, you absolutely pay Personal Property Tax on leased vehicles in VA.


Not according to the VA Dept. of Motor vehicles. If it is a personal lease, you don't.

https://www.dmv.virginia.gov/vehicles/#leased.asp

Some leased vehicles may qualify for Personal Property Tax Relief as provided in ยง 58.1-3523, et.seq. Vehicles leased to a person (versus a business) and used predominantly for non-business purposes may qualify for car tax relief. If you have not received car tax relief on a leased vehicle that you believe qualifies, contact your leasing company and ask them to be sure to report your vehicle to DMV. If your leasing company has reported your leased vehicle to DMV and you have not received car tax relief, contact your local Commissioner of the Revenue or Director of Finance.


You do pay personal property tax on a lease in VA, but not directly. Your finance company is paying it and it's been rolled into your monthly payment. I found this out when moving a leased car from VA to DC which made the personal prop tax disappear and my monthly payment got reduced as a result.
Anonymous
Post 05/01/2018 11:59     Subject: Re:leasing vs buying
I don't want to worry about the dings on my bumper. I want to drive a lot in the first five years (long road trips).
Anonymous
Post 05/01/2018 08:10     Subject: leasing vs buying
If you keep a car for only three years, a lease may end up being more economical. But, that is most certainly not the most economical way to own a car (which is buy a reasonably priced car and keep it until it dies).

If you're buying a different car every three years, your primary concern is not price.

That said, I have never leased, but for a variety of reasons it made sense to lease a car 2.5 years ago when I needed one. I got a basic model on a cheap lease deal at the end of the model year. That car has cost roughly $2300/year for 3 years (absent maintenance costs, which would have to be paid on any car). That's a pretty good deal. It would take me a little more than 8 years of ownership to break even. But, that's being willing to accept any car on whatever deal is offered. I also don't drive a lot, so can have lower mileage leases.